Cogta facing challenges financial irregularities probe continues

The department of cooperative governance and traditional affairs’ (Cogta) annual report for the financial year ended 31 March, shows a slight improvement compared with 2019, but investigations into financial irregularities are ongoing.

The department has good intentions, as Cogta Minister Dr Nkosazana Dlamini-Zuma states in her foreword, “to secure the well-being of South Africans through a revitalised cooperative governance model”.

But has it implemented the requisite systems and oversight mechanisms to manage the R90.3 billion of appropriation
funds (2019: R85.1 billion)?

Cogta deputy minister Parks Tau recognises the challenges:

• Governance, financial management and administration challenges
• Non-viable municipalities due to apartheid spatial planning
• Systemic issues around powers and functions

Qualified audit opinion

The Auditor-General issued a qualified audit report for the following reasons:

1. There was not sufficient appropriate audit evidence to support the:

• Payments made to community work programme (CWP) implementing agents of R2.9 billion (2019: R2.6 billion).
• Payments made to consultants: business and advisory service in the amount of R372.4 million (2019: R401.7 million).
• Verification of capital assets amounting to R346.6 million (2019: R277.8 million).

2. The systems to maintain records of prepayments were overstated by R159.4 million (2019: R170.7 million). Money down the drain include:

• Fruitless and wasteful expenditure amounted to R7.5 million.
• A municipal infrastructure grant payment was made to an incorrect entity in a previous year, and a material loss of
  R103 million is likely to be incurred.
• Payments were made to deceased participants in the CWP in 2018-19.
• Project management fees paid to agents for services not received in 2018 and 2019.
• Irregular expenditure increased from R1.318 billion in 2019 to R1.330 billion in 2020. The increase relates to the prior year, and is “under investigation”. Apart from the wasteful expenditure, the above relates to previous years.

This article first appeared on Moneyweb and was republished with permission.

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